Good morning all!

  • FOMC minutes more hawkish but markets end higher anyway;
  • Eurozone PMIs expected to weaken further in August;
  • Another good month expected for UK retail sales;
  • Plenty of US data to come this afternoon.

European indices are set for a slightly positive open on Thursday ahead of the PMI readings from Europe, retail sales for the UK and a whole host of data from the US.

There is a feeling though that despite all this data coming out, the markets only really care about one thing and that’s Janet Yellen’s speech at Jackson Hole tomorrow. It’s a little surprising that European indices are pointing higher this morning, not to mention the fact that their US counterparts ended comfortably in the green yesterday, as the FOMC minutes from the last meeting had more of a hawkish tone than some expected.

We’re certainly seeing more emphasis on the pace of the recovery at these meetings and the minutes from the last meeting showed discussions around how to raise rates when the time comes. Of course, this doesn’t put the Fed on a par with the Bank of England which appears far closer to the first rate hike after two policy makers voted in favour yesterday, but we do appear to have reached the point where the hawks are beginning to speak up a little more. Maybe the markets are willing to overlook this as long as Chairwoman Yellen continues to offset these with some extremely dovish comments of her own.

We’ll hear exactly what she has to say tomorrow morning when she speaks on the labour market at Jackson Hole. There’s been a lot of speculation about Wall Streets absence this year with some suggesting that it may be the Fed’s way of avoiding the discussion of short term measures and instead focusing on the longer term strategy of the central bank. If that is the case then investors who are looking for a Bernanke-esque Jackson Hole performance are going to be very disappointed.

It’s also surprising that European markets aren’t feeling more of the impact from the weakness in the HSBC manufacturing PMI which fell to a three month low of 50.3 in August. Quite often, these Chinese figures can set the tone for the day but it appears that right now, investors are far more concerned with what the Fed is doing than how China is performing. As long as the country is on course for 7.5% growth, which it appears to be, then investors aren’t worried.

There will be a big focus on economic data today, everything from PMI readings and retail sales figures to jobless claims and housing data being released. We kick things off quite early on with the release of the manufacturing and services PMIs for the eurozone, which once again are not expected to be particularly good. Investors are desperate for signs that the region is going to take a turn for the better but it appears they’ll have to wait a little longer with the numbers expected to show a further decline in confidence in August.

The UK economy is looking in far better shape and retail sales numbers for July are expected to give further evidence of this. The numbers are expected to be a little softer on a year on year basis than what we’ve seen this year, but that’s not something we should be concerned about as it’s more reflective of where the economy was 12 months ago than where it is now. You have to remember that 18 months ago we were talking about a triple dip recession in the UK so the numbers were considerably worse. Compared to a month ago, sales are expected to have increased by 0.4%, which is more than good enough to keep investors happy.

Finally it’s over to the US, where we’ll get weekly jobless claims data, the latest manufacturing PMI reading, housing data and the July Philly Fed number, so there’s still plenty more to come on the economic calendar.

Ahead of the open on Thursday, the FTSE is seen 8 points higher, the CAC 5 points higher and the DAX 19 points higher.